To help readers better understand the nuances of foreign policy, CFR staff writers and Consulting Editor Bernard Gwertzman conduct in-depth interviews with a wide range of international experts, as well as newsmakers.

Jacques S. Gansler, who recently chaired a commission investigating the army’s contracting programs and in November 2007 published the findings (PDF), says inexperienced personnel, increasing workloads, and institutional neglect have produced an “opportunity to create fraud” in Iraq, Afghanistan, and Kuwait. Gansler, a former undersecretary of defense during the Clinton administration, says the army needs to change its cultural attitudes toward the contracting profession.

What is the current status of the army’s contracting system?

Two things had happened [to create the current contracting problems]. One is the post-Cold War defense budget plummeted, and as a result you took a lot of people out of the services. In order to maintain the “so called” fighting forces, they took most of the reductions out of the support areas, particularly in terms of the contracting and even the acquisition workforce. Then in the mid-90s, as the budget turned around and after 9/11, they did not replace those [contracting] people. So there was a big gap between the people who were doing the implementation of contracts and a huge increase in the number of contracts, a huge increase in the dollars of the contracts, but an actual reduction in the number of people who are doing the contracting.

While these cutbacks were taking place [the Pentagon] actually eliminated what had been in the army in 1990 a five general officer [position]. Now, if you are military officer thinking about going to the contracting field, and you can get no promotion potential up to the general officer level, you can say I’ll pick some other career.

Why is it beneficial for the army to have officers overseeing the awarding and management of contracts? For enhanced oversight or just for operational know-how?

The generals might say, ‘I want a tent city tomorrow afternoon. I want three meals a day.’ Well, somebody has to say, ‘Three meals a day? Is that lobsters and steak, or is that hamburgers?’ What does it mean in terms of writing a contract now for someone to supply that? I need lots of bottles of water. I need trucks. Whatever it is they need. But they need them right away. They need them in an environment where people are shooting at you. And they still need to do it legally. And they need to be trained in these expeditions operations. In a sense I think it’s important to recognize that this is going to be what the world or the future really is.

Are the roots of the problem due to a historical shift, where the Pentagon is using more contractors in a war zone than ever before? Or is it something else?

We have today about a 160,000 contractors on the battle field. If you assume that that’s what the environment is, it’s 50 percent of the total force of what’s there in Iraq. Now, are the military people who are going to fight the wars aware that half of the force is contractors? Are they giving proper value to that function?

It’s not so much that we haven’t used them. We haven’t used them in the quantity that this operation is involved in. They are almost 50 percent of the force. And war fighting in general is viewed differently. This is not World War III. Insurgent operations are continuing for a long period of time in a hostile environment. And when we go through the normal exercises, and the military prepares for the next Iraq, whether it is some place in Africa or some place in the Middle East or wherever we are going to go, when we prepare for that, we should have people in the contracting field. You can’t do it back in Washington. One of the things that we found was that there was very little of the needed people in the battlefield area and there was very little reach-back in order to be able to do it.

How have the shortfalls you’ve identified hurt the army operationally, as well as from a reputation standpoint?

Well, it’s very clear that the world media looks for those scandal stories, if you will. And it’s clear that the shortage of people and shortage of the needed training and high level experienced people is almost an opportunity to create fraud.

For example, there’s not enough people, or no people really, who can do contract closeouts. The contracts are extended although they are finished. Well that’s an opportunity clearly for some improper actions. There were no people there who could do pricing, to determine whether the prices given to them were the right prices. That’s the sort of thing that you would normally do in peace time back in the United States and do it leisurely and it takes six months to run a competition. You can’t do that in an emergency environment. Another area that we found: after the contract was written, you want to monitor it. But there were no people doing that so they assigned people from the operational unit, tapped them on the shoulder saying now you’re a contract manager as your secondary assignment.

There were also a wide variety of different functions all going on at the same time and not integrated. The different activities even included the State Department and USAID, all in the same environment doing similar things but all separately doing them. We need much more integration of the activities within the services within the DoD, within the army and certainly I think within the State and DoD.

You mentioned that the army’s contracting shortfall create opportunities for abuse. Can you be more specific?

I think it’s caused by the lack of value placed on the contracting community by the army, up to date. Secondly, it’s based on the fact that the air force, even in the military, start their careers in contracting as second lieutenants. In the army they start their career as they are halfway through their career after eight or more years. And so they start out in a combat command and then they are sort of tapped for those people who could go in to contracting after eight years. What we propose is you start as a second lieutenant, same thing with a non-commissioned and what you do is that you spend a couple of years after you signed up to be in the contracting community, you spend a couple of years in the real army, the combat army, so you get your boots muddy and you learn about war fighting so you understand how the army really works. But you are thinking and reading and learning and all your courses are geared right from the very beginning towards being a professional in the contract community.

You note in your report that seventy-seven of the seventy-eight open fraud case are investigations of army personnel, despite that fact that the majority—70 percent—of contracting personnel in theater are air force. What can we glean from these stats about army contract abuse?

Well, it’s still small percentage of the cases, but one is too many. I don’t think it’s fair to say [fraud] is widespread. You have seventy eight examples [and there were] 400,000 contracts in 2006. Would you say that’s widespread? The problem is that those seventy eight cases make the headlines. The 400,000 that we didn’t have fraud in don’t make the headlines. But nonetheless, you don’t want any headlines.

Sure they do, definitely. Let me give you a simple example: the general says to somebody, ‘Give me some vehicles.’ So they get them some vehicles. And then he says, ‘I didn’t mean this kind of vehicle. I meant that kind of vehicle.’ It’s sort of an obvious thing if you would think about if you were here in the United States in peace time you would say, ‘Describe to me, general, exactly what you want.’ And then I’ll write a detailed contract, hold a competition for that kind of vehicle. This would have slowed him down, in effect, if he did all that. So he didn’t do all that, he just ran out and got some vehicles. He did it quickly, probably asked five or six people who supply vehicles, what they could do. He held a semi-competition.

So how do we fix it?

Well, part of it is leadership, clearly. That’s where the general officers come in, and that’s a way of getting a higher value placed on the importance of this. And then the training is a really important piece of it. For all the officers, not just for the contracting officers or acquisition officers, but for the people who are going to be war fighting, to understand the environment in which they are going to operate with the contractors. Most of the contracting people are still being trained how to buy a tank, say, or how to buy an airplane, which is very different than how to support the troops in the field in the war zone. Culturally, there’s not an understanding of this new environment and role were the war fighters do the war fighting, and they are supported strongly by contractors.

Supporting the troops and their ability to do the job is one component of this, the American taxpayer is another. And when you hear about fraud, on top of the wars’ price tag, one might wonder whether taxpayers’ dollars are being taken for granted.

In a certain sense, in the last six years, there has been less emphasis on how much things are going to cost than to get the job done. And I do feel very strongly that the primary issue here is support to the war fighters. The men and women in the services have to be supported. Now, I think we can do it more effectively, and more efficiently, and I put it in that order. I think it’s really important to support them fully, I don’t think we have to spend as much necessarily as we are because I don’t think we are doing it as effectively as we could. And therefore we could make some savings. But our objective here was not to say that you save a few dollars and even the fraud cases are few dollars, they’re in the millions not the billions. But I think on the other hand, I think we can use those billions much more effectively.

Given your past experience with the Clinton administration where would you rank the current Pentagon in terms of how well they have managed contracts on this conflict?

The problem is not an administration problem. There are far too few people to handle it, and so that’s not being done well. It’s not an administration problem. If anything, it’s an army problem. This is going back to the cultural discussion. It’s not recognizing the importance of this [contracting] area. There are few people, as I said who are really trying, really doing a good job, working three shifts a day and seven days a week. I can’t blame those people. It’s the senior people who have decided that it’s more important to do something else than to worry about contracting are suddenly realizing that hey, half of my force are contractors. I haven’t trained the people, I haven’t developed a corps that I need. That’s endemic within the army and across the DoD even, because I think I see the similar kind of thing, although not as exaggerated perhaps, in the air force, marines, and navy. But it’s the army that’s there and that’s got the problem and that’s why our focus was on the army and of course the army recognizes it, given the data on the fraud.

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